Army Audit Readiness Strategy FY 2013 - Army Financial ...

More documents

Recommendations

Info

FY 2013 Army Audit Readiness Strategy Federal Financial Management Improvement Act (FFMIA) of 1996 GPRA Modernization Act of 2010 OMB Circular A-123 - Management’s Responsibility for Internal Control Table 1: Financial Legislation and Requirements Along with the Clinger-Cohen Act of 1996, requires that agencies implement information systems capable of producing auditable financial statements by applying relevant accounting standards. Extends GPRA requirements to include several significant updates to the government-wide performance framework and agency level strategic and performance planning and reporting requirements, such as quarterly progress reviews of agency priority goals. Further defined and clarified federal managers’ responsibility over the establishment of and ongoing assessment of internal controls. The circular also requires federal managers to provide specific assurance on the effectiveness of internal control over financial reporting. In addition to these Federal laws and pronouncements, several DoD- and Army-specific directives require financial improvement. Most recently, Secretary Panetta issued a memorandum on October 13, 2011 accelerating DoD’s audit readiness efforts by moving the milestone to have an auditable general fund SBR to FY 2014. Prior directives include the USD(C) memorandum dated August 11, 2009 and the Secretary of the Army memorandum dated February 18, 2011. The USD(C) memorandum re-focuses DoD Components’ financial improvement and audit readiness efforts by requiring Components to improve financial information and processes most widely used in managing DoD. Budgetary information and processes (culminating in the SBR) and verification of the existence and completeness of mission critical assets are DoD’s priorities. The Secretary of the Army’s memorandum makes clear that all Army personnel—both within and outside of the financial management practice—are responsible for audit readiness activities. The memo also outlines the audit examination process and preceding audit readiness assistance available to Army organizations. These memorandums define the audit environment and shape DoD’s approach to achieving and sustaining auditability. Compliance with these laws and directives requires the cooperation of financial and functional managers in integrating their processes and systems. Federal agencies that have done this are more likely to achieve an unqualified audit opinion. Such an opinion serves as both a report card of how agencies have successfully aligned their financial processes and systems and as a message assuring management and external stakeholders they can rely on the financial data for decision-making purposes. Attaining an unqualified opinion is the desired result of an audit but the audit process itself is a useful tool to gauge an organization’s operational effectiveness. 2.2 FIAR Guidance and OUSD(C) Priorities The OUSD(C) Financial Improvement and Audit Readiness (FIAR) Guidance articulates the comprehensive DoD-wide strategy and methodology for improving financial management, prioritizing improvement activities, strengthening internal controls, and ultimately achieving auditability. The Army Financial Improvement Plan (FIP) complies with the OUSD(C) FIAR Guidance to ensure consistent and timely progress by the Army in achieving DoD-wide goals. Accountability & Audit Readiness: Sustaining Army’s Strength 2
FY 2013 Army Audit Readiness Strategy To achieve the OUSD(C) FIAR Guidance objectives, the USD(C) has identified two major financial improvement priorities: Budgetary information, as contained in the SBR. Information regarding the existence and completeness of mission critical assets. OUSD(C) has formulated a comprehensive strategy with a critical path that allows DoD to focus on improving the information most useful to management, while moving closer to the ultimate goal of achieving and sustaining auditability. The critical path includes: Appropriations Received Audit SBR Audit Mission Critical Assets Existence & Completeness (E&C) Audit Full Audit except for Legacy Asset Valuation Full-Scope Financial Statement Audit Each DoD Component must perform the activities prescribed by the FIAR Guidance to address each of the OUSD(C) priority areas. DoD Components have the ability to identify various assessable units, which are smaller, more manageable combinations of material transactions or financial statement line items. OASA(FM&C) is responsible for defining assessable units and ensuring adequate coverage of all OUSD(C) priority areas, as defined in the FIAR Guidance. The FIAR Guidance defines a series of standardized phases that all reporting entities must follow to achieve audit readiness. The methodology currently focuses on the identification and implementation of key control objectives (KCOs) and key supporting documents (KSDs). Meeting the OUSD(C)-defined KCOs, coupled with comprehensive risk assessments, allow reporting entities to effectively design or identify existing control points within their business environments. The identification and collection of KSDs allow reporting entities to better evaluate the effectiveness of controls, substantiate recorded account balances, and provide auditors with the supporting documentation required during an audit. Updates to the OUSD(C) FIAR Guidance in December 2011 included several significant changes. One of these changes is the full integration of requirements prescribed in Office of Management and Budget (OMB) Circular A-123, Appendix A, Internal Control Over Financial Reporting. This integration will drive efficiency in the use of DoD’s resources to meet the objective of achieving an audit ready state. Other examples of changes include updates to key capabilities and capabilities measures and a list of audit “dealbreakers” that have prevented reporting entities from achieving audit readiness. The FIAR Guidance can be found on the OUSD(C) website here: http://comptroller.defense.gov/fiar/documents/FIAR_Guidance_2011.pdf 2.3 Army Achievements to Date For more than a decade, the Army has worked to implement financial improvements and increase awareness of the importance of audit readiness throughout the organization. In October 1998, OASA(FM&C) published the first iteration of the Army FIP, then known as the Chief Financial Officer’s (CFO) Strategic Plan, which incorporated all known initiatives and Accountability & Audit Readiness: Sustaining Army’s Strength 3
Page 1 and 2: [Type the document title] [Year] Ar
Page 3 and 4: FY 2013 Army Audit Readiness Strate
Page 9: FY 2013 Army Audit Readiness Strate

Army Audit Readiness Strategy FY 2013 - Army Financial ...

Create successful ePaper yourself

Delete template?

Save as template?